Outsourcing as a start to focus on your ‘basis of competition’

By Mike Atwood, senior consultant in outsourcing with experience across a variety of industries

In this blog post, we've invited our guest blogger Mike Atwood to share his thoughts on which elements can form a strategic basis for taking outsourcing decisions:

“Competition is the basis of Business. The more competition the more innovation, market responsiveness, and lower prices are delivered to the customer. No company competes on every dimension in its market. Every company has a ‘basis of competition’: the reason why a customer chooses that company over a competitor. The most effective companies understand this and concentrate their energy and resources to be the very best in the world at delivering that competitive basis.

This ‘basis of competition’ is something that every company should devote the vast majority of its capital, and management attention. It is also the only thing you should never outsource. The beginning of any outsourcing project is a strategic plan for your business, which requires Companies to look at those existing functions that take time, energy and capital, and determine which significantly impact their ‘Basis of Competition’. Once those are identified everything else should be regarded as a cost and a distraction.

The most important question when considering outsourcing is not whether a function is ‘core’ or not; every function is important and has to be performed in the most effective and efficient way. Instead, companies should ask themselves if these functions can be performed better and at a lower cost in-house or by an outsourcing firm. If a provider can do those things at the necessary quality level and at a less expensive cost, outsourcing this activity will free up capital and allow companies to focus on delivering and improving their competitive differentiation.”